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00:00LET'S BRING IN OUR GUEST. THANK YOU FOR JOINING US. HOW DOES IT MOVE? WE HAVE SEEN PERHAPS A MOVE TOWARD COMMON PROSPERITY AND ALSO SEEN WHAT THE PBOC DID. LET'S FACE IT, WHAT ARE YOU LOOKING AT IN TERMS OF THE CHINESE ECONOMY AND HOW IT DOVETAILS INTO HOW YOU LOOK AT IT FROM AN INVESTMENT PERSPECTIVE? > > GOOD MORNING. IT DOESN'T MOVE THE DIAL THAT MUCH, I THINK. THE NUMBERS, THE DECEMBER NUMBER WASN'T THAT STRONG. YOU ALSO HAVE TO CONSIDER A LOCKDOWN ONLY STARTED AT THE END OF DECEMBER. YOU COULD REASONABLY ASSUME IT IS YOUR SO FAR IN JANUARY. AS YOU HINTED, A LOT OF WHAT IS HAPPENING, THE SLOWDOWN IN CHINA, A LOT OF IT IS SELF INFLICTED, AND PROSPERITY, THE REAL ESTATE SECTOR, THE ZERO COVID STRATEGY, OMICRON IS REALLY NOT COOPERATING. IT IS DIFFICULT TO SEE HOW WE ARE GOING TO HAVE MUCH STRENGTH IN THE FIRST QUARTER, MAY BE FIRST HALF OF THIS YEAR IN, DESPITE THE SUPPORT FROM THE PBOC AND LATER PROBABLY FROM THE FISCAL SIDE. RISHAAD: IS THERE LIKELY TO BE A RISK PREMIUM IN BUILT AND? PROBABLY TO SOME EXTENT ALREADY WHERE YOU HAVE TO TAKE INTO ACCOUNT ANY FURTHER REGULATORY CHANGES? THAT DOES WEIGH IN THIS YEAR WHEN IT COMES TO ECONOMIC STABILITY? KIERAN: ABSOLUTELY AND YOU WILL SEE THAT AS A CONTINUATION OF WHAT HAPPENED SINCE LAST SUMMER REALLY, OR EVEN BEFORE THAT. ABSOLUTELY. COMMON PROSPERITY, IT IS THE STRATEGY OF THE GOVERNMENT. THEY'VE GOT A POLITICAL CALENDAR THIS YEAR THAT SUGGESTS THEY ARE VERY UNLIKELY TO MOVE AWAY OR GO LIGHT ON THEIR PLANS. AND ABSOLUTELY THERE IS A RISK PREMIUM BUILT UP FROM THAT, CERTAINLY FROM AN EQUITY POINT OF VIEW. YOU WILL NOT ONLY NEED TO SEE UNDERPERFORMANCE, WHICH WE HAVE, CERTAINLY FROM THE OFFSHORE CHINA PERSPECTIVE, BUT YOU WILL NEED TO SEE A CLEAR DIRECTION ON RETURN TO GROWTH AND HOW COULD THAT HAPPEN? FROM OUR SIDE, I THINK THE OMICRON STRATEGY OR THE COVID-19 STRATEGY AND EXIT STRATEGY, IF THERE IS ONE, WILL BE PRETTY SIGNIFICANT AS WELL. HASLINDA: OBVIOUSLY CHINA MARKETS LOOKING TO THE PBOC FOR SUPPORT. FURTHER EASING EXPECTED. HOW DO YOU POSITION FOR THAT? KIERAN: WE DON'T HAVE AN OVERWEIGHT POSITION IN CHINA. WE THINK THE EASING SAW TODAY, IT WAS 10 BASIS POINTS, THE EXPECTATION WAS MAYBE FIVE. IT WILL NOT BE ENOUGH TO COUNTER THE ECONOMIC FORCES AT PLAY. BOTH THROUGH SELF-INFLICTED THE COMMON PROSPERITY INITIATIVES AND EXTERNAL FACTORS SUCH AS OMICRON. WE WOULD BE WAITING BEFORE WE WOULD GET MORE EXCITED ABOUT CHINA, AND OBVIOUSLY THE CHINA MONETARY POLICY IS COUNTERCYCLICAL TO THE REST OF THE WORLD. WE THINK THERE ARE A LOT MORE OPPORTUNITIES OUTSIDE OF CHINA WE ARE MORE EXCITED ABOUT AT THE MOMENT. HASLINDA: IS A TIME TO GET EXCITED ABOUT CHINESE TAX? -- TECH? IT LIFTED THE HANG SENG INDEX TO THE HIGHEST IN 14 MONTHS. KIERAN: IF WE WERE CERTAIN THE REGULATORY PRESSURE WAS GOING TO EASE, THERE IS A GOOD STORY AROUND A LOT OF THE NAMES. THEY'VE GOT SCALE, SOME OF THEM HAVE INNOVATION. I THINK WE NEED TO SEE PRETTY CLEAR SIGNALS AROUND THE END OF THE REGULATORY TIGHTENING CYCLE. WHETHER WHAT IS GOING ON IN MACAU IS THE SIGNAL FOR THAT, I THINK IT IS TOO EARLY TO TELL. AND CERTAINLY FROM THE TECH COMPANIES THEMSELVES, THEY ARE DOING A LITTLE BIT OF SELF-REGULATING WHERE YOU WILL RISHAAD: OUR GUEST IS STILL WITH US. WE HAVE BILL ACKMAN SAYING PERHAPS THE FOMC NEEDS TO COME IN WITH A 50 BASIS POINT HIKE IN INTEREST RATES AS SOON AS THEY CAN TO ENSURE CREDIBILITY. DISCUSS. HASLINDA: [LAUGHTER] KIERAN: IT HAS BEEN QUITE CLEAR THEY ARE EXPECTING TO ACHIEVE LIFT OFF AS EARLY AS MARCH AND IT COULD EVEN BE NEXT MONTH. I DON'T THINK 50 BASIS POINTS IS IN THE CURRENT RANGE IN EXPECTATIONS FOR THE FIRST MOVE, AGAIN IT IS ABOUT WHAT IS HAPPENING WITH INFLATION AND IF IT IS NOT NORMALIZING, YOU COULD EASILY SEE 50 BASIS POINTS IN THE FIRST HALF OF THE YEAR. WE THINK. SO I'M NOT SURE IF THAT IS EXACTLY WHAT IS EXPECTED, BUT YET, 50 BASIS POINTS, DEPENDENT ON INFLATION, EASILY. HASLINDA: WHAT ARE YOU EXPECTING? 3, 4, 5, EVEN MORE? KIERAN: OUR BASE CASE IS WE PROBABLY SEE THREE, AND IT DEPENDS ON WHAT IS HAPPENING WITH INFLATION. IT IS DEPENDENT ON THE DATA. IF INFLATION STARTS TO MODERATE, PARTLY DUE TO WHERE WE ARE IN THE CYCLE, BUT ALSO CENTRAL BANK ACTIONS, MAYBE THREE IS ENOUGH. IF IT IS NOT, IT WILL HAVE TO BE MORE. IF YOU LOOK AT THE PERFORMANCE OF U.S. 10'S THIS YEAR AND BANK STOCKS, THE MARKET IS EXPECTING WE WILL PUSH THROUGH 1.8 ON THE 10'S. THE FED WILL ACHIEVE LIFT OFF AND WE WILL SEE RATES HIGHER THAN 2% IN THE NEXT FEW MONTHS. THAT IS PART OF WHAT WE EXPECT AS WELL. HASLINDA: HOW ABOUT THE DOLLAR? QUITE A QUAGMIRE. BULLISH CALLS COME ALONG CALLS FOR THE DOLLAR, BUT NOT SEEING STRENGTH -- WHY NOT? KIERAN: OBVIOUSLY HIGHER INTEREST RATES FOR THE DOLLAR IN GENERAL. THE LONG DOLLAR TRADE IS A LITTLE BIT CROWDED. IT MADE ALL OF THE SENSE IN THE WORLD. THAT INCREMENTAL BUYER. BUT CERTAINLY WE SEE RATES HEADED ABOVE 2%, THEN WE

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UBP: Positive On Stocks, Overweight U.S., Europe

Union Bancaire Privee Head of Equity Research for Asia Kieran Calder says he is positive on equities, with an overweight on U.S. and Europe. He was speaking with Haslinda Amin and Rishaad Salamat on "Bloomberg Markets: Asia." (Source: Bloomberg)

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